AAA Monthly Gas Price Report: Gas Prices Dropping Heading into August

Gas Prices Post Unusual July Decline with Record-High Refinery Production

The national average price of gas posted the largest July decline in six years with average prices dropping about 16 cents per gallon during the month. Even more unusual, gas prices fell 30 out of 31 days during the month, making it the first time on record that prices have fallen this consistently in July. Today’s national average price of gas is $3.52 per gallon.

“Falling gas prices are nearly the opposite to what we usually see this time of year,” said AAA spokesman Avery Ash. “Refineries are running at full tilt and there is more than enough gasoline in the market, which has helped bring down prices despite multiple overseas conflicts.”

Gas prices have declined primarily due to record-high refinery production and adequate supplies. Domestic refineries have processed the most crude oil on record during the previous four weeks (four-week average of 16.5 million barrels per day), according to data by the Energy Information Administration. This has led to very high utilization rates, particularly for refineries that have access to North American crude oil supplies. Strong refinery production generally results in higher gasoline supplies and lower fuel prices.

In recent years gas prices have increased considerably in July due to significant demand and occasional problems with refinery production. From 2011-2013, gas prices nationally increased in July by an average of 16 cents per gallon.

Gas prices began the current slide in the final days of June. The national average price of gas has declined for 33 out of 34 days for a total of about 17 cents per gallon.

The decline in gas prices has come despite significant conflicts overseas in places like Iraq, Libya, Gaza and Ukraine. While oil prices remain expensive, prices are relatively stable because oil production and export levels have not noticeably changed.

The monthly average price of gas in July was $3.60 per gallon. Due to the high cost of gas at the beginning of July, the monthly average was slightly higher than last year’s monthly average of $3.58 per gallon. Gas prices averaged $3.67 per gallon last month.

Gas Prices in Good Position for the Remainder of Summer Driving Season

“Gas prices may cost less than in recent years this August as long as refinery production remains strong and oil costs do not rise due to unexpected issues,” continued Ash. “The biggest threat to continued falling prices would be a major hurricane striking the U.S. Gulf Coast. Prices also could rise or remain flat if refineries cut back on production or if there are any major refinery outages.”

Hurricanes often strike in August, which can disrupt oil production, refinery facilities and pipelines. In August 2012, Hurricane Isaac swept ashore in Louisiana. The brief closure of surrounding refineries helped increase the national average price of gas by 11 cents per gallon over nine days.

Gas prices have decreased in August for three of the previous five years. Last year the national average fell about three cents per gallon during the month, but the average spiked 33 cents per gallon in August 2012.

August and July generally are the busiest driving months of the year, according to data collected by the Federal Highway Administration. Last August, U.S. drivers drove an estimated 266.9 billion miles.

Consumers Paying the Lowest Gas Prices in More than Four Months

Consumers this week have paid the lowest gas prices since the middle of March. Today’s national average price of gas is $3.52 per gallon, which is a fraction of a cent higher than yesterday. Today’s higher average was the first increase since June 27. By comparison, drivers paid about 11 cents more per gallon at this time last year.

Gas prices this year generally have remained slightly less expensive on average than in recent years. The annual average so far this year is $3.53 per gallon, which is the lowest average for the first seven months of the year since 2010. Last year the national average through July 31 was $3.57 per gallon.

The five states with the highest average prices today include: Hawaii ($4.34), Alaska ($4.13), California ($3.98), Oregon ($3.92) and Washington ($3.92). The five states with the lowest gas prices today include: South Carolina ($3.25), Alabama ($3.26), Tennessee ($3.29), Oklahoma ($3.30) and Missouri ($3.30).

AAA updates fuel price averages daily at www.FuelGaugeReport.AAA.com. Every day up to 120,000 stations are surveyed based on credit card swipes and direct feeds in cooperation with the Oil Price Information Service (OPIS) and Wright Express for unmatched statistical reliability. All average retail prices in this report are for a gallon of regular, unleaded gasoline. For more information, contact Michael Green at 202-942-2082,mgreen@national.aaa.com.